Archive - Oct 20, 2009 - Story

Senator To Release Letter To SEC Chair Schapiro Proposing Reforms To Protect Market Integrity, Transparency Amid Rise Of Unregulated Trading Platforms

Schumer To Say: Alternative Trading Systems Like Dark Pools Should Have To Compete On Level Playing Field With Traditional Stock Exchanges

Non-Exchanges Like Dark Pools Should Have To Adhere To More Regulation, Bear Fair Share of Costs of Market Surveillance

Every time frame you look at in US or European equities below weekly is showing quite a bit of divergence. Short term support on S&P futures is 1,089.80. A break there and we should retest 1,075/1,076. There is an minor intermediate support at 1,082 which corresponds to the support of the short-term bullish channel, but given the amount of divergence pent up in the market a retracement to 1,075 seems more likely. This will be a key level to determine whether we at least test 1,036 which is the support of the open triangle on the daily chart.

• 20 reasons why capitalism is now dead (MarketWatch)
• Galleon's traders seek legal advice, share stock tips, update resumes as firms like Dick Bove's Rochdale pulls their money from Galleon (Bloomberg)
• Sarkozy calls dollar move against euro a "disaster," says an exchange rate
  of $1.50 per euro “is a disaster for the European economy and
  manufacturing sector” (Bloomberg)
• PPI down -0.6 on flat expectations: looks like deflationary bonds will be right as always, or at least until the SPARC cores are turned on (Bloomberg and AP)
• New home construction at 590,000 below 610,000 expectation, new apps for building permits down 1.2% (AP)

One of the central tenants of central bank politics is that these venerable institutions must be insulated from political influence and intimidation.  It was not so long ago that the obscure and enigmatic central banker was considered the most adept.  The "independence" of central banks is intended partly to service their unenviable burdens.  In particular, the need to put the breaks on the economy here and there- a decidedly unpopular mandate politically, indeed, one that can topple administrations.  Further, to resist the many calls to spur short-term growth (paid back with interest in later years) via monetary policy.  In this context, and given the recent calls for total transparency (read: total political accountability) of the Federal Reserve System how is one to look at "The Great Moderation?"  In the case of this article, as an opportunity to offer a pair of novel and contrarian theories:

1.  It was the presence of political accountability in monetary policy, not its absence that sewed the seeds of the present crisis.

2.  The natural conclusion can only be that Monetary Policy Institutions require less political accountability, not more.